Posted
by
timothy
on Thursday July 29, 2010 @04:29PM
from the wonder-what-the-dept-of-education-pays dept.

CodePwned writes "I recently took over a position at a rather large company where I discovered my group was paying $30 per gigabyte per month! That's $360 per year per gigabyte to our own IT department. While I understand costs are different depending on the scale, redundancy, backup and support methods, there doesn't seem to be any good papers on what range you should expect your costs to be. So far, my research shows an average of $1 per gigabyte or less for internally hosted space. What do you pay?"

Until about two years ago we were charged about CHF10 (CHF=Swiss Franc) per 100MB per month to our internal (now mostly outsourced) IT provider, that is 3 times more than you, roughly. But I don't know what our service charges are now. On top of that we pay a flat rate of CHF600 per person for IT support per month. Doesn't matter how much you call IT. I felt like we were ripped off, but no-one seemed to care.

Stop beeing retards and do internal invoicing. Not like the board of directors is billing "per decision". IT department as a billing self ruling department is so damn stupid. And no one seem to understand it. It is like having a fire department only going to fires that is in line with their mission statement.

And having an it department invocing per GB instead of having a budget for storage and then the company can allocate it as they please. And if someone has a bigger need, it should be a question for the company. Not a matter of giving a profitable it department.

As I understand, this stems from the idea of outsourcing IT. IT outsourcing companies love this, because they can easily compare apples to apples. "Your internal IT dept. charges $30/GB to host and support your files, but we can do all that for $25/GB!" However, many IT needs don't fit into that model very well. Which model you use really depends on your needs, the size of your company, and the department structure.

We fight with this type of stuff all the time. The market price for things and the amount IT "charges" for the same thing can be way out of line. What I usually see is some large infrastructure investment by IT gets broken up and tacked onto other services charged to the departments that depend on them. Your TB drive may cost $100 but it may be in a high end raid on a server with some fault tolerance attached to a UPS ran by a full team of support. The company can either cover the cost of IT or hand it back to you based on the services you use.

You may be able to get away with getting you own 1TB drive and not paying the IT tax. But if the IT expenses are not being met, they will find other ways to charge you.

I would kind of like to start charging our departments something for network space. It goes unchecked at the moment. I have 16 out of 500 users that use 1/2 of our home folder storage.

Sure, if we'd work like this everyone will want to have a 100Gb homedirectory/outlook mailbox/subversion repo whatever. You say go to management and I'll tell you what they'll decide: the teams that make most of the money get it the rest wont. So cut out the middleman and make this common practise by rebilling I say. But then everything should be rebilled (and that's where it goes wrong most of the time: some team rebill and some don't. This effectively means mixing a capitalist and communist society and that don't work....)

This is exactly what happens. If IT resources are "all you can eat" then IT ends up rationing the supply. This works in smaller organizations where IT is heavily involved in the business. As the size of the organization gets larger, having IT deciding priorities between various groups is less desirable.

The inevitable result of unbilled IT is the CEO holding the line on the IT budget while the departments are demanding more and more services. Simple econ101 will tell you what happens next. If you fix supply and decouple demand, you get rationing.

There is an inevitable curve as companies get larger and larger:

1. IT handles everything2. resources become constrained and an executive group attempts to prioritize IT projects3. internal billing and budgeting is used to prioritize IT resources4. Numbers used for internal billing are used to justify outsourcing and/or mini IT departments spring up inside divisions.5. outsourcing/distributed IT produces mixed results and added complexity - so IT is insourced.

There's a big difference between TCO to the company and whatever price the IT department charges *your* department for service. IT department prices are typically based on historical costs that don't necessarily represent the Moore's Law equivalent precipitous drop in disk space costs, and are often based on gold-brick engineering practices and specialized applications.

For instance, if you're running a high-end database or an Exchange server that's supporting the whole company, it needs to have a blazingly fast SAN array from EMC or somebody, and instead of using $50 1TB SATA drives, it's using $300 15000rpm 300-Gb SAS drives with SSD accelerators and uber-fancy controllers, built into a framework that lets them do maximum IOPS and live no-performance-hit backups. On the other hand, if you're trying to back up desktop data in case of laptop failures, or provide shared file storage where people can retrieve dull bureaucratic standards documents, performance isn't critical, price and volume are, so you want a big slow cheap Network Attached Storage device packed full of TB SATA drives, with a bit of RAID to deal with the occasional drive failure, and still some kind of backup system or maybe a tape-loading robot (if tapes are still even cost-effective.)And it's not uncommon for IT departments to charge you for the former, even if you'd rather have the latter.

I'm dealing with a variant on this problem right now, for a network management application. The servers and storage in the data center are designed for blazing speed, but the application I'm trying to support is customers who want to archive all their network event data for a couple of years to make Sarbanes and Oxley and their friends happy, so I need fast servers for today's data, maybe something medium-speed for a week's data (but SATA's probably enough), and 98% of my data will never be looked at again but the rules want it online, not in a box of tapes.

Somebody posted a great analogy in a different thread the other day, to paraphrase:

Two kids are fighting over a pie, on says we should each get half and the other says I want it all. Mother intervenes, and after discussing it with the children, the one who wanted half get a quarter of the pie and the child who demanded it all, gets 3/4 of the pie.

That's how most companies handle accounting.Because the are run by salespeople...(my addition)